Small Business Optimism Is Still High

That could be because the economic data does not yet fully reflect the strain from tariffs that small businesses are under.

Good Morning!

Here are today’s highlights:

• Homebuilders are now bracing for a 50-percent kitchen tariff.

• Should an entrepreneur marry another entrepreneur? Cameron Madill did the research.

• The owner of a California carwash files a $50 million lawsuit against federal immigration authorities.

• In Texas’ barbecue capital, a family business splits and devolves into soap opera.

THE TRADE WARS

For many smaller businesses, the true cost of the tariff onslaught has yet to register: “According to a recent analysis by the Federal Reserve Bank of Atlanta, 86 percent of companies in the United States that import goods by sea, the most common means of international trade, have fewer than 50 employees. But unlike bigger companies with diverse supply chains, smaller firms typically import goods from one supplier and one country, it found. That makes them susceptible to sharp increases in tariffs and gives them less leverage to negotiate favorable pricing terms with suppliers. At the same time, small businesses typically do not have the financial resources to rejigger supply chains away from highly tariffed countries.”

• “Most economic data does not yet reflect the strain from tariffs that small businesses say they are under, in part because many of the most onerous tariffs have only been in place since August. A gauge of small-business optimism from the National Federation of Independent Business ticked up in August.”

• “Holly Wade, the executive director of the federation’s research center, said distress is concentrated in sectors such as retail and wholesale trade that are most exposed to tariffs and is not yet being felt more broadly. Small business owners ‘seem to be generally in favor of the current environment notwithstanding those businesses that are more negatively impacted by specific policy shifts,’ she said.”

• “Small businesses are likely to feel a stronger pinch when the tax year ends and they assess their revenue and payroll numbers more closely, said Andrew Chamberlain, the principal economist at Gusto, which provides payroll and related services to small businesses. ‘It’s just a matter of time before some businesses that are right on the margin anyway are having to scale back,’ he said.” READ MORE